China state refiners weigh resuming Iran oil imports, sources say

• Iranian oil loadings surged to 1.6 million barrels per day between June 19-24, up from just 340,000 bpd in the first 18 days of June, following the reopening of the Strait of Hormuz
• State refiners face obstacles including unclear banking and shipping arrangements, while also benefiting from rising exports from Saudi Arabia, Kuwait, and Iraq as Middle East supplies normalize
• National Iranian Oil Co (NIOC) will be the sole contractual party for oil sales under the waiver, with Russia's ESPO blend serving as the pricing reference for potential new deals

Summary: China State Refiners Consider Resuming Iranian Oil Imports

Key Development: China's state-owned refiners Sinopec and PetroChina are evaluating resuming Iranian crude purchases for the first time since 2019, following a U.S. waiver announced Monday that permits global customers to buy Iranian oil and settle in U.S. dollars.

Background: The waiver follows a memorandum of understanding that ended the U.S.-Israeli conflict with Iran. Both companies halted Iranian oil purchases in 2019 after former President Trump reimposed sanctions on Tehran's petroleum exports.

Market Activity: Iranian oil loadings surged dramatically to approximately 1.6 million barrels per day (bpd) between June 19-24, compared to just 340,000 bpd during June 1-18 and 370,000 bpd in May, according to Vortexa.

Key Challenges:

• Banking, insurance, and shipping logistics remain uncertain
• Abundant alternative supplies from Saudi Arabia, Kuwait, Iraq, West Africa, Brazil, and Russia
• Weak Chinese domestic fuel demand dampening import appetite
• Unclear which banks will provide financing and clearing services
• Questions about Iran's shipping capacity

Commercial Details: The National Iranian Oil Company (NIOC) will serve as the sole contractual party for oil sales under the waiver, with Russia's ESPO blend crude used as pricing reference. NIOC maintains marketing teams in Beijing and Shanghai.

Current Market: Chinese independent "teapot" refiners currently remain primary Iranian crude buyers, settling purchases in yuan through intermediaries. Among state majors, Sinopec appears most likely to resume purchases due to supply cuts and inventory needs. The company previously inquired about purchases under a 30-day waiver in March but found the timeframe too restrictive.